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As the Federal Reserve’s 2-day meeting finishing on July 31, 2024, draws near, financial markets are abuzz with speculation and anticipation. While the consensus suggests that the Fed will maintain its current interest rates, traders are keenly watching for clues about potential future rate cuts.

The Fed is widely anticipated to hold rates steady at this meeting, with expectations for a rate cut in September gaining traction. The focus will be on the accompanying policy statement by Fed Chairman Powell, as traders look for signals indicating the Fed’s readiness to ease monetary policy in the near term.

Global markets are closely monitoring two key aspects of the July FOMC meeting: whether the US Federal Reserve will keep interest rates unchanged or implement a cut, and whether Fed Chair Powell will maintain a hawkish stance or shift to a more dovish tone. Markets expect the Fed to keep the target range of 5.25%-5.50%. Reactions across different asset classes—stocks, bonds, and currencies—will provide further insights into market sentiment and expectations.

Experts suggest that any indications of a shift towards a more dovish policy could lead to increased volatility in financial markets, while a hawkish stance might solidify current market trends.

The post Trade the US Dollar on the Fed Meeting first appeared on IC Markets | Official Blog.

China Vice Finance Minister:

• Will strengthen fiscal policy adjustments, deepen fiscal and tax
  reforms
• Will steadily
  implement consumption tax reform in step-by-step way
• Will standardise
  management of local govts’ non-tax revenues

The data from China today did not inspire confidence:

• China June 2024 Official Manufacturing PMI 49.4 (expected 49.4)

This article was written by Eamonn Sheridan at www.forexlive.com.

The focus was the inflation data:

• Australian Q2 core inflation +0.8% q/q (expected 1.0%)
• AUD/USD has dropped under 0.6500 after core inflation comes in lower than expected

The lower than expected core reading removes the prospect of a rate hike by the Reserve Bank of Australia at its meeting next week on August 5 and 6.

–

As for the retail sales data on the month, it’s a strong beat. The Australian Bureau of Statistics cite mid-year sales. I would have thought this would be accounted for in seasonal adjustment.

More:

• sales volumes -0.3% q/q and -0.6% y/y
• per capita (per person), sales down 0.9% q/q, the 8th consecutive quarter falling and down 3% y/y

This article was written by Eamonn Sheridan at www.forexlive.com.

It was the CPI that was the focus:

• Australian Q2 core inflation +0.8% q/q (expected 1.0%)
• AUD/USD has dropped under 0.6500 after core inflation comes in lower than expected

The RBA will not raise its cash rate at the meeting next week, August 5 and 6.

*

As for the credit data, stronger on the month but weaker on the year.

This article was written by Eamonn Sheridan at www.forexlive.com.

more to come

Manufacturing PMI 49.4

• expected 49.3, prior 49.5

Services PMI 50.2

• expected 50.2, prior 50.5

The Composite comes in at 50.2

• prior 51.0

more to come

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China has two primary Purchasing Managers’ Index (PMI) surveys – the official PMI released by the National Bureau of Statistics (NBS) and the Caixin China PMI published by the media company Caixin and research firm Markit / S&P Global.

• The official PMI survey covers large and state-owned companies, while the Caixin PMI survey covers small and medium-sized enterprises. As a result, the Caixin PMI is considered to be a more reliable indicator of the performance of China’s private sector.
• Another difference between the two surveys is their methodology. The Caixin PMI survey uses a broader sample of companies than the official survey.
• Despite these differences, the two surveys often provide similar readings on China’s manufacturing sector.
• The Caixin manufacturing PMI will follow on Thursday, services on Monday

Tags

This article was written by Eamonn Sheridan at www.forexlive.com.

This takes a potential Reserve Bank of Australia rate hike at the August 5 and 6 meeting of

—

The monthly CPI data from Australia does not show all components of the CPI.

—

Background to this data is here:

• Three scenarios to watch for the Reserve Bank of Australia outcome
• Australia Q2 CPI preview – “June CPI should not close the door on a rate cut”

This article was written by Eamonn Sheridan at www.forexlive.com.

Tech Stocks Hit Ahead of Earnings – Nasdaq Down 1.3%

US tech stocks took a hit in trading yesterday as investors looked ahead to key earnings reports from the ‘magnificent 7’ companies in the sessions ahead. While the Dow rose 0.5%, both the S&P and Nasdaq lost ground, declining by 0.5% and 1.28% respectively. US Treasury yields hit a four-month low as traders factored in a more dovish Federal Reserve later today. The 2-year yield fell by 2.6 basis points to 4.360%, and the 10-year yield decreased by 3.1 basis points to 4.147%. The dollar traded in tight ranges against most major currencies, except for the Yen, which appreciated against the greenback and other currencies as the market priced in a potential hike from the Bank of Japan later today. Oil prices dropped to a seven-week low due to ongoing demand concerns, with Brent and WTI both losing 1.4% to close at $78.63 and $74.73 a barrel respectively. Gold jumped 0.8% to finish at $2,403 per ounce.

Bank of Japan to Hit the Yen

Traders are preparing for more volatility in the Yen today as the Bank of Japan delivers its latest rate decision and associated statement. The market is split 50/50 on whether there will be a rate hike today, making the decision ‘live’ and creating several potential scenarios that could lead to significant movements in the Yen. A hike is expected to result in further appreciation of the Yen, breaking recent lows in UsdJpy and the crosses, whereas a ‘hold’ and a more conservative or dovish message will push the pairs higher into recent ranges. Traders looking at UsdJpy are aware that the Fed will make its rate call just a session and a half later, potentially creating a perfect storm scenario from a rate differential perspective. The biggest impact is likely with a BOJ hike and a more dovish Fed. Whatever happens in the coming sessions, most traders expect the Yen to be trading at very different levels in 24 hours’ time.

The Biggest Trading Day of the Year

Today could turn out to be one of the biggest trading days of the year, with some traders looking at the event calendar and noting the significant activity scheduled for the next three sessions. Two major central banks and six or seven major tier 1 data releases are on the cards. The early focus in the Asian session will be on Australia, where both CPI data and Retail Sales numbers are due out, with another strong CPI print possibly locking in a hike from the RBA. The focus then shifts to Japan for the highly anticipated Bank of Japan rate call, expected around lunchtime in Tokyo. In the European session, key Core CPI numbers are due for the Eurozone before the New York session opens with several updates, including the ADP Non-Farm Employment, Cost Index, and Pending Home Sales numbers in the US, as well as GDP data in Canada. These are all released early in the session before investors settle in for the latest update from the FOMC. Although no change is expected, Jerome Powell is anticipated to indicate a rate cut in September. Adding to the excitement, several big-name earnings reports, including from Facebook, could make for a very hectic day.

The post General Market Analysis 31/07/2024 first appeared on IC Markets | Official Blog.

Business confidence has a huge jump to 27.1%

• prior 6.1

Activity outlook 16.3%, also higher

• prior 12.2

ANZ’s
Key points

• Business confidence jumped 21 points to +27 in July, and expected own activity lifted 4 points to +16. To be fair, these up/down responses are relative to an ever-weaker starting point (past own activity dropped 6 points to -24), so there’s a bit of a “well, can’t get any worse” vibe to it.
• Pricing intentions lifted 3 points to 38, but inflation expectations eased from 3.5% to 3.2%. Inflation indicators were softer in the later sample.

NZD/USD is barely responding, around 0.5906

This article was written by Eamonn Sheridan at www.forexlive.com.

I’m hesitant to read too much into this rally for NQ, given it’s a thin liquidity time. It does appear though that large sell orders haven’t been resting in the range we’ve seen so far.

Quite the sell off on Tuesday, thanks NHK:

• Forexlive Americas FX news wrap: Bank of Japan leaks the possibilty of 15 bps hike

(Yeah, that’s my narrative, feel free to add yours in the comments folks. The more the merrier!)

This
chart is from our charting app, which is free and can
be found at this link

This article was written by Eamonn Sheridan at www.forexlive.com.

• Prior month 8.140M revised to 8.23M
• Job openings 8.184M. That is down -941,000 over the year. The job opening rate held at 4.9% in June
  • accommodations and food services +120K
  • state and local government excluding education +94K.
  • Durable goods manufacturing -88K
  • federal government -62K
• Vacancy rate of 4.9% versus 4.9% previously
• Quits rate 2.1% versus 2.1% previously (revised from 2.2%). The quits rate was down 434,000 over the year.
  • Construction -64k
  • state and local government education -55k
• Separations rate 3.2% little change from last month
  • state and local government -51K.
  • Arts entertainment and recreation -39k
• Hires rate 3.6% at 5.3 million. Versus a year ago, the hires are down 554,000

Job openings rising is positive for employment. THe quits rate remaining steady is also steady.

The chart below shows the number of unemployed persons per job opening is at 0.8. Although off lows, it remains near lows.

This article was written by Greg Michalowski at www.forexlive.com.

Slumping factory output

Japanese manufacturers outlooks:

• see August output +0.7% m/m in
• see July output +6.5% m/m in

This article was written by Eamonn Sheridan at www.forexlive.com.

Better than expected retail trade results for the y/y. The m/m is lower than the prior. Mixed results for this data following recent wage gains.

This article was written by Eamonn Sheridan at www.forexlive.com.